The collapse of boomers’ million-pound property dream

Melissa LawfordSun, August 9, 2026 at 6:00 AM UTC

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Across the UK there are only a few thousand people each year whose expected inheritance tax (IHT) bill would exceed £1m. To incur such a large bill, you need to be worth a tidy sum – at least £4m.

Yet for this small cohort of Britain’s richest boomers, there are signs that their homes are becoming a much less important source of their wealth.

Among those paying at least £1m in inheritance tax, people’s homes made up just 20pc of the value of their estates in 2023-24 – down from 27pc in 2013-14, according to Savills.

This was in stark contrast to smaller estates, which saw property increase as a proportion of wealth over the same period. On average, for those paying IHT their homes made up 36pc of their net worth.

Although these high-rollers are a small bunch, the sharp decline has important lessons for homeowners across the country.

Decades of soaring house price growth may have made generations of older Britons dazzlingly wealthy. But now the market is coming back to bite them as prime prices tumble across the country.

Members of the £1m IHT club have seen the proportion of their wealth from property slide the most because they own the most expensive homes.

Savills analysis showed that a typical £1m IHT payer owned property worth £1.9m – a sum roughly seven times the average UK house price.

These properties are concentrated overwhelmingly in London and the commuter belt, which accounted for 50pc of all IHT paid to the Treasury in 2023-24.

Kensington, the City of London and Westminster, Richmond Park and Hampstead & Kilburn are all in the top 10 constituencies for IHT receipts, paying a tenth of the nation’s IHT bill – more than Scotland, Wales and Northern Ireland.

And it is these homes that are recording the most dramatic house price falls in the country.

Before 2014, during the peak of the market, rich people bought prime property in London as an investment.

“You knew it would make money. In two or three years’ time, the value would have gone up by 10pc. Generations of people made hundreds of thousands of pounds just by sitting and doing nothing,” says Will Watson, head of The Buying Solution, a prime buying agency.

“Those days are very much over.”

Property prices in London’s most expensive postcodes have plunged by 26pc since 2014, according to Savills, which forecasts they will fall by another 2pc this year.

Many older homeowners are facing huge losses.

“In the last 12 or 24 months, in pretty much every example of homes that we have been buying for our clients, we are paying less than the owners did 10 years ago. That is not factoring [in] the fact that they would have refurbished the property,” says Watson.

He notes a client who purchased a flat in South Kensington, west London, earlier this year for £4.2m. This was £1.3m less than the seller paid for it a decade earlier, and they had spent around £500,000 on renovations.

Another client bought a house in Chelsea, west London, for £6m, £500,000 less than the seller paid in 2012.

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“If you take a step back, you can see the losses some people are making and you can see that, wow, that has actually been a terrible investment,” says Watson.

Nearly a third (32pc) of all homes in England and Wales that were originally bought for at least £1m are now worth less than their owners paid for them, according to analysis by Connells Group, the UK’s largest estate agent.

“Everyone is guilty of thinking their property is worth more than it is,” says Watson.

“Some people refuse to accept that the house is not worth what they think it is and so it just sits there on the market.”

Others are wary that the market could fall even further and want to sell so that they can put the money to better use elsewhere, says Watson.

Lucian Cook, at Savills, says: “For the very wealthy who are responsible for a sizeable chunk of IHT receipts, other assets have become more important [than residential property].

“The increased exposure to taxes, most notably stamp duty, as well as the political uncertainty seen over the past decade have put downward pressure on central London prices.”

This toll has also hit other parts of the prime housing market, he adds. Though many areas saw house prices surge after lockdown, this proved short-lived at the higher end of the market.

Britain’s luxury property market has been disproportionately hammered by a succession of punitive tax changes.

George Osborne, the former chancellor, introduced new stamp duty bands for more expensive properties in 2014 – including a 10pc charge on the value between £675,000 to £1.5m and then a 12pc rate above £1.5m.

Then in 2016, came a three percentage point surcharge for anyone purchasing a property in addition to their main residence.

In 2024, Rachel Reeves raised this to five percentage points. That was after the Tories also introduced a two percentage point surcharge for overseas buyers in 2021.

This means that the marginal top rate of stamp duty payable on a luxury home is now 19pc.

An overseas buyer purchasing a £5m second home in London will have to pay £863,750 in tax. Even for a UK buyer purchasing their main home at this price, the bill is more than half a million pounds.

Heightened political uncertainty and changes to the non-dom tax regime for wealthy internationals have also deterred global buyers.

And there is a wider story of UK property market strain. Affordability has hit a wall and high interest rates have been hammering buyer demand since 2022.

After adjustments for inflation, house prices are roughly the same as they were at the end of 2003.

But it is the top end of the London market where dreams of rising asset prices have completely died.

“If, after you have done improvement works and paid stamp duty, you can break even, you have done well,” says Watson.

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Source: “AOL Money”